Milwaukee Biz Blog

We need real reform in the financial markets. This reform should include how we regulate and how we audit and enforce these regulations.

Reform will not prevent another crisis that we have just witnessed or the S&L/Mutual Savings Bank crisis some three plus decades ago or frauds such as Madoff's. But reform can catch these problems before they get out of hand, which will reduce the impact on our economy.

• First, we must restore confidence to the secondary mortgage market. Liquidity in mortgages provided by the secondary market is essential to our economy. Banks and S&Ls should not be holding mortgages for long periods of time and should have a market to which they can sell.
  Require escrow for real estate taxes and homeowners insurance for all homes where the home buyer does not have a 20-percent down payment.
• Require that the buyer have a 20-percentcash down payment or that another entity, such as a mortgage insurer, the VA, FHA or Farmers Home Loan Agency, is covering the 20-percent difference between appraisal and mortgage.
• Forbid financial institutions from lending borrowers their 20-percent down payments.
• Ensure that income and assets listed are verified.
• Ensure that appraisals are realistic
• License all appraisers and mortgage brokers nationally, or at the very least, create a standardized system for appraisers and mortgage brokers, including the personnel of any firm issuing paper to be sold on the secondary market.
• Strictly regulate mortgage insurance companies. There have been too many incidents where these firms have had conflicts of interest (using subsidiaries as collateral) or have made risky business decisions that affect their contingent liability funds.
• Require that all use the standardized underwriting and forms issued by Fannie Mae and Freddie Mac.
  Make full disclosure and other paperwork simple to understand. Reduce this paperwork to one or two pages that are understandable.
• Where possible, require that homeowners with less than a 20-percent down payment receive counseling so that they have a budget and so the mortgages they receive are fair, that charges required of them are reasonable and that the property they are buying is worth what they are paying.
• Restrict such practices as "interest only mortgages," balloon mortgages or variable mortgages with teaser rates.

In regards to regulation of the financial industry, it is important to separate the audit and enforcement functions from the influence of politics and business as much as is possible. Politics influences enforcement.

 

A recent example was the firing of Gary Aguirre, an Securities & Exchange Commission (SEC) attorney lauded for his excellent work. He was fired because he wanted to interview John Mack for allegedly giving inside information to Pequot, a hedge fund. (I could have used examples from both Democratic and Republican administrations).

The New York Stock Exchange, the Nasdaq, the Federal Reserve Bank and the SEC did little to go after abuses on Wall Street. For years, Eliot Spitzer was a lonely crusader against Wall Street abuses.

"Self-regulation" by the industries themselves has been not been successful. The Federal Reserve failed to stop abuses in the banking industry through its audits. Their "objective" is to protect banking, but too often this means avoiding confrontation by the few banks that control most of the country's assets.

My suggestion is to create an independent agency that has many features of an inspector general or the General Accounting Office. Fund their budget for seven years at a time. Give a single 10 or 12-year year term to its leadership. Forbid its civil servants from becoming lobbyists or working in the industries they have regulated for five years.

This will not be perfect, but it will go a long way in isolating political influence on the agency.

Furthermore, I suggest that we separate regulation and oversight by an industry's function. Credit, life, health and property-casualty insurance companies manage risk; banks, S&Ls and mutual savings banks lend money. Mutual funds and annuities deal in collective investments. Money managers, hedge funds, financial advisors and stock brokers manage money or offer advice.

Multiple and contradictory regulations need to be reduced, but there should continue to be competition in enforcement. National tests, continuing education and licensing should be national. Licensing by states based on the national model should continue.

 

Bob Chernow is a futurist who predicted the S&L/mutual savings bank crisis, the future of mortgage backed bonds and the recent sub-prime crisis. He works in the financial industry. His opinions are his own.

An attorney is trained to understand that witness statements do not equal the facts. Similarly, Department of Transportation (DOT) estimates do not equal facts. They are opinions and, if politically motivated, are biased.

Let's look at the facts: In a 2008 letter to Sen. Jeff Plale, the DOT estimated that the cost of replacing the Hoan would be $220 million. Now, after one year of deflation, the DOT has inflated the Hoan repair costs to $240 million, as reported in the Milwaukee Journal Sentinel on Monday. To put this into perspective, the entire Marquette Interchange project cost over $800 million. So, the DOT is estimating that the cost to repair an existing bridge is more than one-fourth the cost to build the Marquette, which included the construction of 20 new bridges, some as tall as the Hoan. The DOT also believes, according to Monday's article, that the cost to simply re-paint the Hoan will cost $40 million.

The DOT also gives "facts" from both sides of its mouth. In December of 2002, DOT officials concluded that the Hoan could not accommodate a bike lane because the 6 lane bridge with shoulders was nearing capacity and could not be reduced to four lanes. Now, in 2009, the DOT is proposing a four-lane boulevard with no shoulders and a roundabout to accommodate the 46,000+ daily traffic count. Imagine 120,000 trucks each year trying to navigate a roundabout. Trucks will likely take both lanes to navigate turns, if it's even possible at all.

More facts: the original Marquette Interchange was planned at $1.4 billion and included the replacement of ramps and the 794 connector to the Hoan. After robbing money from the transportation funds to balance deficit budgets, the current administration required DOT to reduce the scope of the Marquette Interchange to approximately $800 million instead of the $1.4 billion by cutting out this connector work. It's no wonder they got done early and under budget as DOT Secretary Frank Busalacchi touted; they did less.

Finally, going outside of the normal transportation planning process, the DOT arrogantly hired HNTB to plan alternatives to the Hoan and its connectors without consulting with the communities this would impact. Is it because the DOT no longer had the needed money to re-deck not only the bridge but also the work that had been cut out of the Marquette Interchange?

Fact: The Southeastern Wisconsin Regional Planning Commission (SEWRPC), the federally designated planning agency for this region, has completed and published its official report for transportation planning through the year 2035, which retains the Hoan Bridge and the 794 freeway as part of an important transportation corridor. This report followed the normal channels with DOT experts taking factual information gained from traffic counts, holding open meetings and getting all the information to form these recommendations.

So, for those who don't want to be irresponsible by not getting the "facts" when planning for the Hoan Bridge, let's include all of the facts. The DOT has done an end-run around the normal planning process and appears to be providing inflated estimates that advance an agenda. MMAC (Metropolitan Milwaukee Association of Commerce) sent a letter to the Governor asking to study this new agenda. My office did check the facts regarding ownership of the land below the Hoan. It was not surprising to find that most of this land is owned by the City of Milwaukee on both the north and south portions of the bridge. The city also owns much of the land used by the Port of Milwaukee that relies heavily on the Hoan for ingress and egress.

My office will continue to feed oxygen to this fire by asking questions about the reason for the HNTB study. It is notable that the DOT is not solving their deficit surrounding the Zoo Interchange or the I-94 corridor. Perhaps DOT thought that the south shore communities would be the least likely to object. If so, I am hopeful that the Coalition to Save the Hoan will show the DOT they were wrong.

Milwaukee County Supervisor Patricia Jursik represents the county's Eighth District.

The proposed state budget has a public policy issue inserted that will require any private development that uses any form of public financing in excess of $2,000.00 to pay a prevailing wage to all laborers involved with the project. 
While this is a laudable goal, the Wisconsin Realtors Association believes that this mandate could increase the cost of development for a particular project anywhere between 10% - 40%. The current form of the mandate has far reaching implications for the life of a development.
As an example, there are two possible scenarios that come to mind that extend well beyond the initial development where the mandate could be detrimental to job creation and new development. After Mr. Developer has developed a new 100-acre business park that required public financing and Mr. Developer has paid the prevailing wage mandate for the development of the land, the prevailing wage mandate is attached to any new development that occurs within this project for the life of the project.
As an example, two years from the completion of the new business park, ABC Manufacturing would like to build a new 50,000 manufacturing facility on a 5 acre parcel of land within the development. Although ABC Manufacturing had nothing to do with the original development ABC will have to pay a prevailing wage to any contractor they select to construct their new facility within this business park.
Another example would include Mr. Real Estate Investor constructing a multi tenant office building in this business park. Mr. Investor will pay a prevailing wage at the time of construction, as well as during the life of the property as tenants move on and the space needs to be re-tenanted. Mr. Investor will have to pay the prevailing wage every time that he has to complete renovations to a space within the property.
There are certainly trades within a development, especially on larger scale and complex developments that warrant paying a higher cost to the contractors to ensure the necessary expertise and quality of the task. There are also areas of construction, such as small-scale tenant improvements, where small businesses compete more on flexibility, speed, and price. The need for a highly skilled laborer and the additional costs that they bring are not necessary for these types of projects. The prevailing wage mandate will drive up the cost of development for developers, investors, and for businesses.
The end result will be that the development does not happen or the cost will be passed on in one or all of the following ways; to the taxpayers in the form of a larger request for public funding, to the tenant in the form of higher rent, or to the business in the form of a higher cost for the facility.
A strong argument can also be made that small businesses associated with the field of construction will be disproportionately affected by this mandate because their distinct competitive advantages include competing on pricing, flexibility, and speed. All things being equal on pricing, if a developer is faced with paying a prevailing wage to a large union shop who has the reputation of better training and skill level and a choice of paying a prevailing wage to a small business owner who does a quality job but doesn’t necessarily have the access to the skilled and trained labor pool, the easy selection would be to employ the large union shop. The small business will also be hampered by the increased burdens of record keeping and confusing classification issues both of which are issues that a human resource department could easily handle, however such departments are rarely in place at small contracting companies.
The use of public financing in the form of TIF districts, new market tax credits, and other public incentives are extremely important tools to spur economic development. Two projects that were recently in the news and related to Wisconsin included the announcement by the State of Michigan offering nearly $150 million in tax credits and incentives to Johnson Controls for a state of the art lithium-ion Battery Plant and the State of Louisiana offering $9 million in public incentives to lure Thomas Industries away from Sheboygan. In a globally competitive market place the State of Wisconsin should be looking at ways to enhance the effectiveness and use of appropriate public financing options to spur economic development as opposed to creating obstacles to the implementation of a successful tool that encourages job creation. 
Prevailing wage is certainly warranted for many aspects of larger scales developments, however mandating prevailing wage for all aspects of a development with $2,000 or more in public funding will drive up the costs for developers, businesses, and taxpayers, potentially prevent projects from happening, and also impact the ability for small businesses in construction to land contracts because their competitive advantage on pricing will be taken off of the table.

Jeff Hoffman is the president of IBA-Wisconsin, the Commercial Association of Realtors Wisconsin Government Affairs Committee and is a vice president with Pewaukee-based Judson & Associates, S.C.

Farmers, businesses and anyone who owns property will be threatened by increased lawsuit abuse under a provision in Governor Jim Doyle’s budget. 

Called "joint and several liability," the provision would require businesses or individuals to pay up to 100 percent of the cost of a lawsuit even if a jury says they were as little as 1 percent to blame.

Under present law, if you are found 1 percent at fault, you are responsible and liable to pay 1 percent of a judgment awarded to an injured party. The person that is 99 percent at fault has to pay their share. That's fair and reasonable. But a provision in the governor's budget proposal will change that.

Farmers could literally lose their farm and business owners might have to close their doors if they are a victim of this unfair proposal. This bill denies fairness and equity to those that have worked hard to build up a business or acquire property.

Support for this comes primarily from the trial lawyers. They argue that injured parties should be compensated for their injuries and loss. Yes, injured people should have the opportunity to sue and recover for their losses, but the money should come from the people that are responsible.

Under the governor's proposal, if the person that is mostly responsible for injuries  has inadequate or no insurance, then the other party with insurance, property or assets will be forced to pay. Shifting the responsibility from those that are mostly at fault to those that have virtually no fault is unfair and punitive.

This provision, if it becomes law, could make a farmer or business owner responsible for 100 percent of the cost of someone else's action.  

Of all businesses, farmers are among the most at risk from the lawsuit abuse the budget provision invites. Farmers may not make a lot of money. But, because they require a lot of land and equipment to make a living, they can be targets for the predatory lawsuit abuse this legislation encourages.

A plaintiff's attorney might argue that the farmer's large combine sitting along the roadside may have momentarily distracted a careless and speeding driver who then drove through a stop sign and severely injured someone. A jury may say the farmer is 1 percent at fault and award the injured party $1 million. If the driver has inadequate, little or no insurance or assets, then the farmer is responsible for the balance of the jury award. After the farmer's insurance company pays its limit, then the farmer can start selling his land, machinery and cattle so that he can satisfy the judgment. This will put him out of business. Under current law, the farmer would have been responsible for only 1 percent, or $10,000, and the farmer likely would have had insurance to cover that amount.

There are two ways to prevent this. One is to buy millions of dollars of liability insurance coverage. The other is to call your state senator and state assembly person and tell them you want this out of the budget.

This proposal is bad for farmers, bad for business, bad for people that have assets and bad for Wisconsin.

 

Jim Tlusty is president of the Wisconsin Association of Mutual Insurance Companies.

Editor's note: Milwaukee Mayor Tom Barrett today delivered his State of the City Address at the Harley-Davidson Museum. The text of his speech follows in a special edition of the Milwaukee Biz Blog.

Fellow Milwaukeeans and special guests, I am pleased to stand before you to present my fifth report on the State of our City. Thank you, Gail for that welcome and introduction, Harley-style.

Welcome to Harley-Davidson's world-class attraction and welcome to the Menomonee Valley. When I took office in 2004, the Harley-Davidson Museum project was at a standstill. I immediately committed my administration to moving forward with the plans and together, with Harley-Davidson and the Common Council, this incredible cultural asset rose out of an old public works yard.

We also saved the taxpayers money by consolidating two public works facilities into one. These projects are never easy, but they are certainly worth our efforts. Thank You Harley-Davidson for your commitment to Milwaukee.

I chose this venue not only because of the Harley-Davidson story, but also because of the story of the Menomonee Valley. I hope when you drove here this morning you took Canal Street, and if you didn't, I strongly encourage you to drive through the Valley soon.

What you see today is in stark contrast to what you would have seen just five years ago. What was then the City's biggest eyesore has become home to growing companies and first-rate attractions. It's an invigorating drive, and during a time when the economic news is not good, it's a great example of what forward thinking can achieve.

It is because of the collective efforts of all our Valley Partners that The International Economic Development Council recently recognized Milwaukee with an award for its achievement in redeveloping the Menomonee Valley. The Valley was recognized as one of the world's 25 best economic development projects. Drive through it, and you'll see why. The Harley-Davidson Museum rightly deserves all the praise and press it receives. This company has survived the Great Depression, the economic turmoil of the 1980s, and other difficult times. What hasn't grabbed a lot of headlines is Harley's commitment to its historic west-side neighborhood. It's there where you'll find the Harley-Davidson Targeted Investment Neighborhood strategy at work. The targeted investment initiative dedicates public and private resources to improving quality of life and strengthening the neighborhood. Working with the City, Harley employees and residents around its headquarters have worked to address nuisance properties, improve public safety, clean up litter, and make home repairs. In fact, 48 percent of neighborhood residents participated in this effort.

I am confident Harley-Davidson will continue to be one of the most successful brands associated with the City of Milwaukee. We are all facing difficult and uncertain times. But just like Harley-Davidson,

Milwaukeeans are resilient. I am fully confident that Milwaukee will withstand the current economic downturn. We will make smart investments, continue to build strong partnerships, provide training to our workforce and improve our public schools. We WILL emerge as a stronger and more competitive city.

Even during this economic downturn, we see signs of optimism. In late 2008, we transformed a brownfield into a success story. We used a remediation strategy to help a central-city business expand in its current location. Medovations, a medical products company, embarked on a $3 million expansion, maintaining its current workforce and adding 12 additional jobs. This is the first physical expansion of this company and we are thrilled to put a brownfield back to use. Equally exciting, the company hires nearly all of its employees from the central city, and provides on-the-job training.

The City celebrated the ninth groundbreaking in the Valley with Charter Wire's new facility, a facility that will be home to 115 employees. Elsewhere in the Valley, the Canal Street Commerce Center, the Harley-Davidson Museum and Derse have all opened for business, and the Potawatomi Casino has expanded.
Through the development of more than a dozen projects, more than 2000 jobs have been created.

I'm proud to say that one of the first new businesses in the Valley is already exceeding our expectations. Palermo's Pizza now has 400 employees and is strongly committed to my Summer Youth Jobs Initiative. In an effort to replicate the success in the Valley, the City has invested $6.4 million in assisting businesses in the 30th Street Industrial Corridor. Through the use of our TIF financing tool, we assisted DRS in upgrading its facility. In 2009, we plan to tackle three of the worst brownfields in the 30th Street Industrial Corridor.

The old tannery on 32nd & Hampton will be part of the Bishop's Creek development.

Further south, we have our sights set on the former Tower Automotive plant, and we're going to clean up the former Esser Paint factory on 31st & Galena. Great progress is being made on Milwaukee's south side in the Airport Gateway Business Improvement District. I'd like to thank Alderman Terry Witkowski for his leadership. We couldn't be more pleased with the progress on the Brewery Project. This $205 million redevelopment will be the first 'sustainable' LEED-certified neighborhood. The city assisted with a $29 million TIF to fund demolition, environmental cleanup, new 'green' streets, sewers and sustainable public improvements.

The Keg House was converted into the Blue Ribbon Lofts. And, we celebrated when the newly-converted Boiler House welcomed it first two commercial tenants. I'm grateful to Joe Zilber for his continued civic philanthropy, and I look forward to working with him for many years to come. One of the keys to a stronger neighborhood is a stronger workforce. I want our workforce development to be the best in the nation in helping those most in need find family-supporting jobs. Since taking over Workforce Investment, we've created a more demand-driven and customer responsive system with activities to connect employers with employees.

The Workforce Board has identified key new partnerships with City employers, such as Supersteel on the Northwest side. Through its customized welding and manufacturing skills training program, the Board helped meet Supersteel's need for an additional 26 trained employees. Growing and attracting green industries is central to my vision for Milwaukee.New green technologies create jobs and lower costs. A 2008 sustainability survey ranked the 50 largest U.S. cities based on water quality, recycling and energy efficiency efforts. Milwaukee ranked 12th, up from 16th in 2006.

And we're not slowing down.

At the current rate of water use, the U.S. will need 16 trillion additional gallons of fresh water per year by 2020. This is equal to one-fourth of the combined outflow of ALL the Great Lakes. 1.2 billion people worldwide suffer from a lack of clean water. 2.6 billion people lack adequate sanitation, primarily due to water conditions. Milwaukee must grow its water economy. Here in Milwaukee, our companies have developed cutting-edge research and technologies associated with treating water and preserving water quality.

We're also home to companies that invent and produce water-quality related equipment. I'm not talking about selling our water. I am talking about growing and selling our expertise with treating freshwater. Water WILL be one of the largest economic growth sectors in the world over the next few decades. And Milwaukee can be the hub for freshwater technologies and research if we do something NOW to plan for our future.

That's where the Milwaukee 7's Water Council comes in. It has a membership of more than 100 water technology companies. Combining that business innovation with UWM in a School of Freshwater Sciences AND the research of the Great Lakes Water Institute is a shared goal that must be realized. Governor Doyle has authorized the school in his budget. Now, we must work to ensure that the financial commitment is there at the end of the state budget process. Imagine a School of Freshwater Sciences with a front door on our incredibly beautiful lakefront.

On the near-south side, we will have the School's freshwater research facilities and a water technology business park. We can and must accomplish this. I want to thank Badger Meter's Rich Meussen, UWM Chancellor Carlos Santiago and GMC President Julia Taylor for their leadership in shaping and pursuing this goal, and I pledge that I will do all I can to make the school and the water technology park a reality. Innovations in the way government delivers services will also improve Milwaukee's competitive standing.

Over the past few months, I have been in discussions with MMSD over its annual $14.6 million natural gas bill. We think it's time for a less expensive option. Just yesterday, I announced that Veolia Environmental Services and MMSD will proceed on the construction of a 17-mile methane gas pipeline that will capture landfill gas in Muskego and deliver it to the Jones Island Water Treatment Facility. Presently, the landfill gas is flared off at the landfill. That's money going up in smoke.

The methane gas will be transported through the pipeline and then converted into a fuel source to heat and dry Milogranite. With the installation of five new methane gas turbines, MMSD will be able to meet its electrical needs and eventually produce excess electricity to put back on the electrical grid. This project will result in lower customer bills for families and businesses, especially our businesses that use a lot of water in production...think Miller beer.

This is a great win-win for businesses and the environment. I want to thank MMSD Director Kevin Shafer, Commissioners Preston Cole and Alderman Ashanti Hamilton, as well as the staff from MMSD and Veolia. This pipeline is also ripe for federal stimulus dollars and we're going to do all we can to get the funding for this and other job-producing projects that help to improve our infrastructure.

I know there are critics of President Obama's stimulus plan. I am not one of them. Congress and the President have made the decision to spend the money. Since our taxpayers are going to help pay that money back, I'd much rather have that money spent in Milwaukee, Wisconsin, than Milwaukie, Oregon.

Since last November, I have been working with Congresswoman Gwen Moore, Congressman Dave Obey, and Senators Herb Kohl and Russ Feingold to make sure Milwaukee's needs were addressed in the bill. Last Friday I met with President Obama and members of his cabinet. I want to also acknowledge the leadership that Common Council President Willie Hines has brought to this issue. The Council and I understand that spending wisely and putting Milwaukeeans to work is paramount. Thank you, President Hines. We have the opportunity to invest in our infrastructure and our workforce. In these difficult times, we have to do all we can to build upon both. Improving our local roads is good for residents and businesses alike.

Attacking lead poisoning lowers health care costs. Weatherizing our older housing stock reduces energy bills and improves the value of City homes. Leveraging federal funds for our police department helps keep our streets safe.

Repairing and improving the KK River channel will enhance the value of nearby neighborhoods and add to the City's green space. Cleaning up the environmental problems at the old Tower Automotive site will lead to future development, more jobs and an increase in the City's tax base. Investing in high-speed and commuter rail will enhance Milwaukee's standing as the state's center of commerce and a national destination. These are the types of activities I want to pursue for funding. These are investments that will pay off in the future and investments that are worth making. We must continue to grow Milwaukee.

In order to grow Milwaukee, we will need to capitalize on partnerships at all levels. Governor Doyle and I recently formed a partnership with the Milwaukee donor community to study the finances of the Milwaukee Public Schools. I'm expecting the work and findings to be completed within the next few weeks. The Governor and I will then present a report and prepare legislation to be taken up by the State Legislature. I can tell you that the briefings I have had on the schools so far are some of the most sobering and difficult meetings I have had since becoming mayor.

The fiscal challenges facing MPS are serious and will require both short and long-term solutions. There are a number of factors that drive the district's financial bottom-line: enrollment, excess facilities, district spending and state school aid formulas. As you know, for years I have been fighting to fix the flaws in the funding of the Milwaukee Parental Choice Program. No matter how you feel about school choice, the fact is Milwaukee property taxpayers pay a disproportionate share of the program's costs.

These costs get attached to the Milwaukee Public School levy, drive up our property taxes, and decrease the amount of money that flows into our classrooms. I am hopeful today that this scenario is about to change. Governor Doyle has included in his budget a provision that phases out after five years the property tax burden caused by not including school choice program students in the calculation of school aids for Milwaukee.

If this provision is included in the final state budget - and I strongly encourage all of you here to contact your state legislator and tell him or her to support the provision - Milwaukee taxpayers will receive $38 million in property tax relief once the phase-in is fully implemented. In the first year alone, we will receive $10 million in tax relief. This is a huge step forward and I want to express my thanks to Governor Doyle. Fixing the school aid funding flaw is only one piece of the puzzle. Unfortunately, there are a lot pieces and not all of them fit together nicely.

As we have worked through the fiscal review of MPS, the issue of school governance has naturally risen from the discussion. I said a week or so ago that it is time for this community to have a very frank and serious conversation about the future of our schools. I don't believe that I'm alone in asking if the structure we have in place today is the best structure to address the issues facing Milwaukee Public Schools now and into the future.

The review of school finances does not address the governance issue. It is the district's finances and performance that raise the governance issue. I have the responsibility to do all I can to ensure the growth and stability of our great city. That responsibility includes doing everything I can to improve the Milwaukee Public Schools. Hiring and retaining great teachers, getting more dollars into the classroom and preparing our students for a bigger and more competitive world are what I want - what most of us want. Improving our schools will not be accomplished with any magic potion or any quick fix. That's why now is the time to have that very frank conversation about the future of MPS. It's a conversation that should be conducted with civility and reason. Teachers are dedicated public servants. A career in the classroom is significant and one involving a great deal of personal sacrifice. Parents rightly want the best education possible for their children and our students should always be our main concern.

Unfortunately, City government is not immune to the international economic downturn. I will prepare our next budget so that it's balanced and doesn't over-burden our residents and businesses. There will be tough cuts.

Not surprisingly, the City's finances are closely related to the condition of the economy. During my first five years in office the City's budget has balanced City services while dealing with declining State aid in a fiscally responsible way. That trend will continue as we address our priorities in difficult times. Governor Doyle's budget contains relatively modest shared revenue cuts. The cuts could have been deeper and I appreciate the Governor's efforts to maintain a funding freeze in 2010.

Nevertheless, the City's budget picture is very cloudy. It is more important than ever that the Mayor and the Common Council address these serious fiscal issues as collaboratively as possible. To that end, I am moving forward on a suggestion offered by Aldermen Michael Murphy and Nic Kovac that we implement joint fiscal planning discussions, which will also involve the Comptroller and representatives from the private sector. In addition, the reconstituted Capital Improvements Committee has the potential to provide serious and well-informed discussion regarding our budget priorities for infrastructure and public buildings. I've also directed my cabinet to continue developing partnerships that will produce efficiencies and tax savings.

From the day I first took office, I have made public safety my top priority. With scarce municipal resources, I still put more cops on the street. The cooperation among police officers, the clergy, community agencies and individuals has led to some very gratifying results.

Homicides of young African American men plunged 65 percent last year-from 54 in 2007 to 19 in 2008. That's still too many homicides and we have much work to do, but it is an astonishing one-year drop. Violent crime is down in all categories.

I am grateful to all the men and women of the Milwaukee Police Department for their hard work. The City funds numerous activities that help to reduce violence in our neighborhoods as well. From the City Attorney's office and the Department of Neighborhood Services, to the Health Department and its focus on family violence prevention through the Commission on Domestic Violence and Sexual Assault, we are making a difference. There is a shared desire in Milwaukee to make our city safer and stronger by reducing crime.

My Office of Violence Prevention has been bringing community stakeholders together. I offer my appreciation to the Homicide Review Commission, our partners in the District and U.S. Attorney's offices, neighborhood groups, and members of the clergy. It's people like Elder Ruben Madison Jr., block club captain on the 3100 block of N. 21st street, who are helping to make the difference. He's teamed up with others to rid the neighborhood of nuisance properties and drug dealing. And with the help of his community liaison officer, enlisted many allies who have worked tirelessly to take back this block. They've done it so well, they're now moving on to the next block and will help the residents there organize their own improvement effort. I'd like to recognize Elder Ruben and the other individuals for contributing to the success of this effort. Please stand and be recognized. Adam Stephens of the City Attorney's Office... Ron Roberts and Matt Dama of the Department of Neighborhood Services... Jake Corr of the District Attorney's Office... Taleeba Mateen and Al Hegwood of Safe & Sound AND, Ray Robakowski, of the Milwaukee Police Department.

I also want to recognize Tina Chang of Syslogic and Don Layden of Metavante for stepping forward and responding to Chief Flynn's request for computer technical support. The department's focus is on data-driven policing, making its IT systems critical to its crime-fighting strategy. Tina is with us today and on behalf of city taxpayers, I thank you.

While crime is down, unfortunately, foreclosures are up. Currently, there are more than 1,800 bank-owned foreclosed properties in the City and more than 4,700 foreclosure filings. Families are being disrupted and our most vulnerable citizens are being impacted. Tenants in foreclosed homes are being evicted with little or no notice. Vacant and boarded-up homes can undermine a neighborhood. They also impact the City's tax base. We're meeting this crisis head on - with strong partners. I convened the Milwaukee Foreclosure Partnership Initiative to help. This group assisted us in developing a coordinated strategy to address the foreclosure issue. More than 100 volunteers representing a broad range of community interests answered the call. I thank them all for their efforts. The partnership developed a plan to intervene with homeowners currently at risk, stabilize neighborhoods and prevent foreclosure issues from developing in the future.

Here are a few of the steps we're taking as a City: Milwaukee will soon launch a Homeownership Consortium that will enhance homebuyer education and financial literacy efforts. We are moving forward with a Court Appointed Mediation program that will bring lenders and borrowers to the table. Similar programs in other parts of the country have achieved considerable success. Thank you to Catey Doyle and the Legal Aid Society for spearheading this program. Alderman Joe Davis and I have been working to secure funding to launch this effort. I'm pleased to announce the City will be contributing $100,000. Thank you, Alderman Davis for your support. And just yesterday afternoon, I spoke to Attorney General J.B. Van Hollen who indicated that his office would contribute a significant amount to the mediation effort as well. In addition, the City has received $9.2 million of federal funding to help address the foreclosure problem. Our plan for using those funds has already been approved by HUD. The funding will be available in a few weeks and we are moving forward to help homebuyers, responsible landlords and developers put foreclosed homes into use. If we are to become a thriving economic engine fueling others, then we will need to build on our regional partnerships. The time is now with the federal stimulus on its way, and the opportunities are exciting.

We need to support and pass the Regional Transit Authority legislation. Our region is much more than interstate highways. An RTA that funds and operates transit will be an asset to Milwaukee and to the region. With an RTA in place we can reverse the death spiral of the current County-operated transit system, expand transit services so workers can be connected to regional jobs and extend commuter rail from Kenosha to Milwaukee. I'm asking all regional leaders to join me in supporting the high-speed rail initiative. There's $8 billion in the stimulus package for this and it has Milwaukee and Wisconsin written all over it. It is also time for regional leaders to join together and demand that federal and state transportation officials recognize that transportation is more than widening highways. It's also about local roads and mass transit.

The first action we should take is to re-direct the state's $21 million appropriation for the construction of the Pabst Farms exit. That money should go into local roads. Let's put those dollars to work repairing potholes and paving local roads that are heavily traveled right now. In tough economic times, we really do need to appreciate what makes Milwaukee such a great place. For example, in 2008, we tied for the second lowest number of fire deaths in well over 50 years. Thank you, Chief Doug Holton and the brave men and women of the fire department. The Health Department formed a partnership with both the Boys and Girls Club and the Fire Department to provide immunizations to Milwaukee citizens. During 2008, the Health Department provided more than 30,000 vaccinations to children and adults representing a 14 percent increase over 2007. Thank you, Commissioner Baker and the staff of the Milwaukee Health Department for your hard work. Thanks also to the many people who are working to help students through the I Have A Dream Milwaukee Program. We officially started our program this past September at Clarke Street School. Last year, we saluted the Kellners' for their generous contribution to cover college tuition costs for the entire first grade.

This year we salute the Brady Corporation for taking on the entire second grade. CEO Frank Jaehnert from Brady is with us today. Thank you, Frank. Thanks to all of you who have participated in my summer youth jobs program. We all need to help build the skills of Milwaukee's future workforce and provide hope in the lives of young people. That's why I'm asking you again to join the Earn and Learn Team. I'm very pleased John Kissinger of GRAEF is the co-chair of this year's program and is with us today. Thank you for your partnership in this very worthwhile endeavor.

Finally, I want to follow-up on an announcement I made at last year's State of the City address. In tough economic times, with less money for family vacations, what better way to spend a summer weekend than to watch the Great Circus Parade.

Yes sireee, step right up. On July 12, Milwaukee will once again host this national treasure. Please join us as we celebrate. There will be many more details coming soon.

We are facing economic challenges not seen in this country for generations. It's important that as we leave here today, we remember the difficulties and challenges our parents and grandparents faced as they made their way through the most difficult economic time our country ever confronted. They were optimistic and confident, and that attitude went a long way. I am confident that Milwaukee will weather this economic storm. I believe in the strength of our community and that the progress we've made will continue through successful partnerships with businesses, unions, and community groups. We do not stand alone; we stand and rise together.

I ask you to be optimistic, to be part of the positive change and to join the progress that's happening in our City. I look forward to working with all of you. Thank you for coming.

Tom Barrett is the mayor of Milwaukee.

State of the County Address
Milwaukee County Executive Scott Walker
Monday, February 16, 2009
Blueprint for Economic Prosperity

Just last year, we helped Tim Sullivan and his Bucyrus International team celebrate the opening of their plant expansion. Over three and a half years, they added 500,000 square feet of workspace and nearly doubled their employee base to 1,400.
I remember coming to visit Tim at his office over on Milwaukee Avenue and talking about his ambitious plan to keep the plant and the jobs here in Milwaukee County.
I remember the push that his board gave to consider moving to another site. And I remember talking about others in the industry moving more and more of their jobs overseas.
Tim Sullivan, however, was committed to South Milwaukee, to Milwaukee County and to Wisconsin. Today, Bucyrus is a success story at a time when we need plenty of success stories.
Thank you Tim for hosting our 2009 State of the County address. Your success is an inspiration to all of us.
I also want to thank South Milwaukee Mayor Tom Zepecki and the Common Council for their leadership and hard work in making Bucyrus a success story.
It is good to have businesses like Bucyrus at a time when our county, state and country face such an economic crisis. Lately, we hear too many stories of job reductions and revenue adjustments.
In just a few moments, I am going to outline our comprehensive plan to get people working again in our county. We want to stimulate the economy with our Blueprint for Economic Prosperity.

But first, I want to share with you a few successes that Milwaukee County had during the past year:
• Our airport achieved another passenger record;
• The zoo opened a new entrance and received a gift for a major new exhibit;
• The Domes reopened and Bradford Beach came back to life;
• We broke ground for the David F. Schulz Aquatic Center at Lincoln Park;
• Our Sheriff created a specially-trained OWI Task Force to target, detect and arrest drunk drivers, making 67% more arrests over the previous year;
• Our EMS system continued to be one of the best in the country;
• Our Family Care program served more older adults;
• We expanded transit options for people with disabilities; and
• We ran Operation Freedom at the zoo again for our veterans, military personnel
and their families.
These are just a few of our successes.
Along the way, we also benefited from the long-term decisions we made over the past few years that helped us adapt to the national financial meltdown:
• While the state government has seen their debt go up since 2002, we reduced our debt by 10%.
• While the Governor talked about cutting 10,000 jobs over eight years but is nowhere close to that goal, we reduced our workforce by 24%.
• While the state raided segregated funds for transportation and patient compensation, we worked with the private sector to create funding partnerships.
• While the state government saw its bond-rating go down since 2002, the county's bond rating improved in recognition of our efforts to address our fiscal issues.

While the state faces a $5.75 billion budget deficit, we finished 2007 with a $7.9 million surplus and are looking to break even for 2008. Unfortunately, the state budget situation is likely to have a negative impact on county government in 2009 and beyond.
Even more serious than the impact of the state budget is the impact of the series of announcements from local employers about job cuts and reductions. This is a major challenge to our well being in Milwaukee County and across Wisconsin.
Individuals and companies who are hurting today cannot wait for help in six months, a year, or several years down the road. We need action now.
This is why I am fighting for a true economic stimulus package.
In 1993, then-President Bill Clinton submitted a stimulus package of $16 billion. This month, the House and Senate passed bills costing nearly $800 billion. There is enough spending in this legislation to give every man, woman and child in America nearly $3,000.
Proponents of the plan claim that it will create or save some 3-4 million jobs. Do the math; this means the government will spend more than $200,000 per job. How does that make any sense?
The better solution is for the federal government to put this money directly into the economy through tax cuts. This is what President John F. Kennedy called for in the 1960s and it is what President Ronald Reagan pushed for in the 1980s. After President Reagan's tax cuts, America had the largest peacetime economic boom in history.
During that time, 20 million jobs and 5 million businesses were created. History shows that tax cuts lead to prosperity.
While politicians in Washington and Madison debate how to spend more on pork barrel projects and bail outs for fiscally irresponsible state and local governments, we have a plan to use these funds to truly get people working again.
Today, I announce our Blueprint for Economic Prosperity. This comprehensive plan calls for immediate action to improve our local economy and to put people back to work.
First, I propose to make it easier for people to afford a home or business in Milwaukee County. Last month, the Chairman of the County Board submitted a wish list of projects worth $512 million. Instead of spending more money, I propose that we put these funds directly into the economy.

Specifically, I call on the Governor and the State Legislature to allow us to stimulate Milwaukee County's economy by taking that same $512 million and provide the following tax cuts:
• Suspend the county sales tax as of March 1st. This will save taxpayers $56.2 million and will give consumers another reason to shop in our county. It will also help small businesses - like builders, auto dealers, merchants and others
• Rebate the county property tax levy bill for 2009. This will save taxpayers $258 million. For the owner of a $150,000 home in the City of Milwaukee, that translates into a savings of $652. For the owner of a small business with a property worth $230,000, it means a savings of $1,000.
• Create a JOBS Fund worth $150 million that can help retain jobs and attract new jobs. The fund will target job creation at small and mid-sized businesses.
• Create an Innovations Fund worth $100 million that will focus on businesses that create jobs in our county related to new innovations. The fund would be created
from a portion of the proceeds from a long-term lease of airport operations.
• Double the Work Opportunity Tax Credit to create 10,000 jobs right here in Milwaukee County. We apply $47.8 million to double the amount of funding available to employers as incentives for adult new hires, summer youth hires, disabled veteran hires and long-term Temporary Assistance for Needy Families (TANF) recipient hires.

In addition, I propose that the Governor and State Legislature take the nearly $4 billion that the State of Wisconsin will be eligible for under the so-called stimulus package and apply it to the quickest method to improve the economy: tax cuts.
Specifically, I call on the Governor and State Legislature to suspend the collection of the state sales and use tax as of March 1 for the remainder of this year. The average
Wisconsin household spends nearly $3,000 per year on the sales tax. Our plan will save Wisconsin taxpayers $3.26 billion in 2009.
This bold move would provide immediate incentive to put money back into the marketplace. Imagine the impact on builders, auto, truck and motorcycle dealers, retailers and all others who are hurting under this economy.
Aggressive tax cuts will put more money into the hands of consumers to stimulate the economy and into the hands of employers who can create more jobs.
For a home builder like Craig Rakowski of Wauwatosa, our plan will directly save about $5,000 in taxes on the materials for building a $250,000 home, and will have the added impact of encouraging more people to build and remodel homes in our area.
Or for someone like Roger Kriete who owns the Mack Truck dealership in Milwaukee, ending the sales tax will save his customers $8,560 on an average $160,000 dump truck. That will be a clear incentive for them to buy now.
I also want to thank business groups like the Greater Milwaukee Association of Realtors, Metropolitan Milwaukee Association of Commerce and the Independent Business Association of Wisconsin who are represented here today. They understand that the quickest way to stimulate the economy is to put more money into the hands of consumers and employers.
Next, we need to increase the odds of finding and keeping a job. One specific way to immediately stimulate the economy is to approve our plan to move the mental health complex to the site of the former St. Michael Hospital. Our plan will provide a state-of-the-art facility for a lower cost; it is shovel ready and will spur economic development and job creation.
Conversely, the county board's proposal to seek $92 million in stimulus funding to build a new mental health facility does not meet the definition of “shovel ready” since it would be 12-18 months before a shovel would actually hit the ground. On top of that, the real cost of building new is closer to $117 million because the plan submitted to the governor does not include parking, infrastructure or site preparation costs.
The better approach is to move forward with our proposal. On top of truly being "shovel ready," it opens the door to the county selling and making the way for development on the land where the current mental health complex sits.
This land is a prime location for further development and expansion of the Milwaukee Regional Medical Center, which is one of our largest job centers. In addition to the proceeds the county would receive from the sale of this land, the further expansion of the Regional Medical Center would provide opportunities for economic development and job creation for the entire region.
And we cannot ignore the stabilizing impact a major County facility located at the former St. Michael Hospital site will have on the surrounding neighborhood. St. Joseph's Hospital provides a good example of how a medical facility can boost a local neighborhood's economy by providing jobs for local residents and creating demand for services ranging from retail, restaurants, housing and office space.
Without our investment in this neighborhood, it is likely the St. Michael's facility will sit empty and actually detract from the local economy of the surrounding neighborhood.
Moving the mental health complex to the St. Michael's site would create a true economic stimulus for this neighborhood.
Today, I call on the members of the County Board to stimulate the economy by acting to move the mental health complex to the former St. Michael Hospital site and to sell the existing site for development at the regional medical complex.
Building a new School of Engineering for the University of Wisconsin-Milwaukee on the County Grounds is another project that will truly help stimulate the economy. We negotiated a reasonable price for the land and now, we need to approve the deal and let UWM get on with their work.
Today, I call on members of the County Board to take up and pass the proposal to provide the land for a new UWM School of Engineering.
I want to thank David Gilbert from UWM and Chancellor Carlos Santiago for their perseverance with this incredible project. Their vision will help build our economy for generations to come.
And there are plenty of other areas of county property that can spur economic development. From land at 6th and State to 68th and State, to land around the House of Correction; we have plenty of opportunities to act on in 2009. As these opportunities are realized, I call for swift action by the County Board.
One of the biggest and most visible tracts of land that is ripe for development is the Park East Corridor. To jumpstart work on this area, I propose selling all of the Park East county land to the City of Milwaukee.
We have a plan for success. The county should sell the land to the city for market value and repeal the so-called community benefits from years ago. City officials have the tools necessary for a large-scale project and they need the flexibility to attract a wide range of interests.
Today, I call on the members of the County Board to approve our plan to stimulate the economy by selling the Park East land to the Milwaukee Department of City Development and to repeal the so-called community benefits ordinance.
Next, we propose new ways to connect people to jobs.
We propose the continued growth of General Mitchell International Airport. Mitchell is an economic engine for the region and it continues to set the pace for passenger growth. We want it to be the most convenient airport in the Midwest. Since the airport is our front door to the business traveler, we will continue our plans to remodel and enhance the facility.
Also, we advocate the pursuit of a long-term lease option for the airport. Mayor Daley in Chicago received a winning bid of $2.5 billion for Midway last September. We want to prepare a similar process, but we need the approval of the County Board.
For more than two years, we have looked into this process, yet some have asked, "“what's the rush?" Simply put, we don't want to lose our chance.
The Federal Aviation Administration (FAA) has a pilot program authorizing the long-term lease of airports to private entities. This pilot program allows for only five slots. One slot has already been used by Midway Airport; one slot is reserved for small general aviation airports, leaving only three slots that Mitchell International Airport is eligible for.
The New Orleans City Council recently voted to apply for one of the remaining three slots, and recent reports indicate that Minneapolis, Oakland, Long Beach and Jacksonville, Fla., may seek the remaining slots. If we are serious about finding an alternative funding source for our transit system and about addressing our structural pension issues, we must act now and (at a minimum) allocate the funds required to prepare an application for consideration by the FAA.
As I have in the past, I envision the proceeds from such a long-term lease going first to pay off all outstanding debt for airport related projects, and then using most of the rest as a long-term funding stream for our bus transit system. As mentioned earlier, I would also use $100 million from the proceeds to establish the Innovations Fund.
Last week, I met with all of the major airlines at our airport. Now, it is time for the county to act.
Today, I call on the members of the County Board to approve funding to submit a preliminary application to the FAA for the program.
In April, we will submit our application to the federal government for a Very Small Starts grant to create a Bus Rapid Transit (BRT) line from the northwest, down Fond du Lac
Avenue to downtown Milwaukee and then back down National Avenue to State Fair Park and West Allis. The County Board approved funding for this request in the 2009 budget.
With a stable funding source for operations and with the use of these federal funds to upgrade the current fleet, we will stabilize and improve the transit system. In turn, this will make the bus system easier for current riders and more attractive to future riders who can use the system to get to and from work.
A week ago, we announced a new partnership on transit with the City of Waukesha and Waukesha County. Once approved by each of our governing bodies, we will no longer have additional transfer fees for bus trips that go beyond county lines. We will help
Waukesha County advance van pools. And we will prepare to purchase a new fare box system that will be the same in both counties.
Today, I want to thank Supervisor Michael Mayo for his willingness to take up this issue before his committee, and I call on the other members of the County Board to approve these enhancements to our transit system.
I also want to thank Waukesha Mayor Larry Nelson and Waukesha County Executive Dan Vrakas for their leadership on this issue. We hope this level of cooperation will expand throughout the region.
Next, we need to increase jobs for those in need.
Last October, Milwaukee County completed the State's process and submitted our application for Family Care Expansion to ensure that people with developmental and physical disabilities are served. Based on the State's timeline, the expected implementation was to be the first quarter of this year.
To date, the State has not committed to a start date while we have over 2,700 people on waiting lists for service. This is a proven, cost effective program for those over the age of 60 and we need swift action from the State to ensure that people with developmental and physical disabilities under the age of 60 receive the services they deserve as soon as possible.
Today, I call on the Governor to keep his commitment to people with developmental and physical disabilities, and without continued delay, approve the expansion of Family Care for these individuals in Milwaukee County.
Finally, we need to streamline and reform government to be able to build an environment for job growth in Milwaukee County.
As the private sector is downsizing workforces and taking steps to control costs just to stay in business, the County too must adopt reforms to fundamentally change the way we conduct our business. To put more of our resources into services to the public instead of benefits to employees, we need to change state law to be more like the private sector.
Today, I call on the Governor and members of the State Legislature to reform collective bargaining laws to reflect current economic conditions and local government's ability to pay. Local governments need relief from the state so we can control employee wage and benefit costs.
During the next year, I will continue to advance proposals to reform county government to make it more effective and efficient. As I have said many times before, the premise that government must either cut services or raise taxes to live within its means is a false choice grounded in status quo thinking. In today's economy, it has become even more imperative that we adapt to changing conditions and find ways to continue to provide core services without raising taxes.
We need to take aggressive steps now to put money into the hands of our citizens and the businesses that create jobs - this will stimulate economic activity and save jobs.
Raising taxes of any kind will result in more job loss, more business closures and more reliance on government services.
Overall, we are ready to rebuild this county, this state and this country. Our Blueprint for Economic Prosperity will lead to real job growth. Today, I call on each of you to help us enact this aggressive plan.
Many of the projects we identify are “shovel ready.” I have a shovel here to show that I am ready to build a better community. Behind me are 19 shovels that represent our interest in working with the 19 members of the County Board to build a better community.
I have hope for the future, and hope is great, but hope without a plan is just a dream.
We have a plan to make the dream of economic prosperity a reality. During times like these, people really do need hope, but people also need to know that there is a real plan to help them get back on their feet again.
We have such a plan in our Blueprint for Economic Prosperity. I am optimistic about our future but it will require swift action from me, the county board, the governor, the Legislature and all of us working together to make this plan a reality.

The announcement this week that Dallas-based Gatehouse Capital has pulled the plug on its Milwaukee Hotel Palomar and Residences development is drawing new attention to the fact that there is still no development occurring on any of the land owned by Milwaukee County in the Park East corridor.
The $150 million, 22-story development planned for the northwest corner of West Juneau Avenue and Old World Third Street was to include 63 luxury condominiums, a 175-room boutique hotel, a restaurant owned by Food Network star Michael Symon, a nightclub, a spa and fitness center, retail space and a parking structure.
Milwaukee developer Rob Ruvin, who was a minority partner in the Palomar project, retains an option on the property, said Milwaukee County Executive Scott Walker. Ruvin told county officials that he is working on a new development plan for the site, Walker said. Ruvin could not be reached for comment.
The Palomar development was seen by many as a catalyst that would help attract more development to the Park East corridor, and the death of the project is a major blow to efforts to revitalize that area.
"The loss of Palomar is huge," said Rick Barrett, managing partner of The Moderne LLC, which is hoping to build a 30-story condo tower across the street from the Palomar site. "That is just such a tremendous loss for our whole city."
The collapse of the housing market and the financial industry crisis are major reasons for the difficulty in attracting development to the Park East corridor.
However, the demolition of the freeway was completed about five years ago, back when the real estate boom was in full swing and years before this recession began. Yet none of the county-owned properties in the corridor have been developed, and the recession only makes it even harder.
With the failure of the Palomar project, local government officials are thinking about what can be done to attract development to the 14 vacant county-owned acres in the corridor.

 

Problems with PERC
Some developments have occurred in recent years, or are still under construction, on privately owned property and a former city-owned property around the county land. Those projects include the Manpower Inc. corporate headquarters, the redevelopment of the former Pabst brewery, Mandel Group Inc.'s North End project, the Flatiron condos, a Staybridge Suites hotel and an Aloft hotel.
Development of the county-owned land is subject to higher standards to ensure that the projects create community benefits. The Milwaukee County Board adopted those standards, called the Park East Redevelopment Compact (PERC), for reviewing developments on the county-owned land in the Park East corridor. The PERC requires developers to pay union-scale wages for construction projects on the county land. In addition, the PERC indicates that developers that hire local employees, provide job training or create green space would be more likely to be selected.
However, developers criticized the PERC, saying it would discourage development. The Milwaukee Common Council rejected a proposal similar to the PERC.
The County Board approved the PERC by over-riding County Executive Scott Walker's veto. Now Walker says the board should consider repealing the PERC.
"I vetoed that and said at the time it would be a barrier to development of the Park East corridor," Walker said.
Walker conceded that the recession is a major reason that development is not occurring on the land now, but he said, "I believe the community benefits played a role" in discouraging development of the county's property.
James T. Barry III, president and chief executive officer of commercial real estate brokerage Colliers Barry, said the fact that few local developers have shown any interest in developing the county-owned properties demonstrates the negative impact that the PERC has had.
"To me, that speaks volumes," Barry said.
Department of City Development Commissioner Richard "Rocky" Marcoux, said another problem with the county-owned property is that the parcels have been sold in large blocks. Larger properties require larger developments, which requires more financing and greater risk, and that prevents many small developers from even trying to develop those properties, he said.
The county should break up some of its Park East properties, especially the property east of the Milwaukee River, into smaller pieces and then sell those smaller properties to developers, Marcoux said.

 

Government gap
Yet another problem for the county-owned Park East property is that the county does not examine the financial feasibility of a project when a developer bids on a site, Marcoux said.
"When developers respond to the (county's) RFPs, nobody is asking if the project is viable," Marcoux said. "Nobody is asking if there is a gap in financing."
After the county selects a developer and its project for the property, the developers seek approval and tax incremental financing from the city.
"Every (Park East) project (proposed for a county property) so far there has been a gap that the city has been asked to fill after the county awarded the land contract," Marcoux said.
Developers and projects are being selected by the county without considering what amount of financial assistance the city will need to provide and whether or not the city will be willing to provide it, Marcoux said.
"The county should be asking themselves, 'Are we willing to fill that gap?'" Marcoux said. "If they are unable or unwilling to do so, then shouldn't they bring the city in (to negotiations)? We should be at the table."
City officials should be included in the evaluation process at the beginning so the developer tells them what financial assistance the project will need and city officials can express if that is a reasonable request, Marcoux said.
In the case of the Palomar project, DCD officials and Gatehouse had a tentative agreement for a $2 million TIF package for infrastructure costs, Marcoux said. The TIF proposal was to be submitted for review by aldermen in the fall.
However, then the capital markets collapsed and Gatehouse said it needed to come up with a new TIF request.
"The market did change, and it changed dramatically," Marcoux said.
Gatehouse decided to pull the plug on the project when it could not obtain the additional financial assistance from the city necessary to make the development viable.
"As the residential and credit markets worsened to historical levels, Gatehouse Capital attempted to obtain a higher level of assistance from the City of Milwaukee, which unfortunately failed to materialize," Gatehouse CEO Marty Collins said in a prepared statement. "The project is simply impractical in this new business climate without a much larger assistance package."
Marcoux and Gatehouse representatives have so far declined to disclose how much financing the developer was seeking from the city when it decided to kill the project.
"We would have had to have a larger TIF, a longer TIF (to pay off) to make up for the market conditions," Marcoux said. "The number kept climbing. (I am) not going to go through our negotiations with them."
Mary Beth Waite, director of sales for The Residences at Hotel Palomar, said local officials needed to do more to support the Palomar development, and in general need to work harder to attract economic development to Milwaukee.
"We need to focus on growing business in our community," she said. "The city and county and Milwaukee 7 are failing in their attempts to capture businesses, and we need to hold their feet to the fire. The Palomar was more than brick and mortar to provide shelter for men and women committing to living downtown. The Palomar was bringing three major business brands to the state. This project was about job creation and the infusion of new companies to bring new partners in progress to our community. The plan as designed would generate 600 construction jobs and 230 full time benefited positions for hotel, condo, convention, and community services operations.
"Kimpton, WTS Spas, and Michael Symon all have consistent histories of giving back and participating in non-profit efforts in every community they become a part of. We needed this high-style hotel to attract more and better conventions," Waite said. "A common complaint in the industry is that Milwaukee does not have enough 'good' hotels. I had already been getting calls to book rooms for conventions upon completion and strong interest from the Chicago Olympic committee to reserving spaces out as far as 2016, based upon their optimism that the Windy City would capture the world event. All of this spreads an infusion of cash to other city businesses, museums and transportation hubs."

 

TIF limitations
However, Marcoux pointed out the taxpayers have already invested $40 million in city, state and federal funds to tear down the freeway spur and install infrastructure to the corridor to prepare the corridor for development,.
"It's not appropriate for us to fill in the gap (for a development) because of the spike in the credit markets," Marcoux said. "You can help the market, but you can't make the market. The city can't step in and create the market."
Marcoux said TIF requests to the city will continue to be evaluated on their merits, and each request and project is different.
Walker said he agrees with Marcoux that some of the county's properties should be broken up into smaller chunks and that the Department of City Development should be included in discussions with Park East developers early in the process. Walker said his office is working on a proposal that would establish a better working relationship with DCD for Park East projects on county-owned land.
The county board has been reluctant to include city officials in the process, he said.
"For whatever reason, the county board has been very parochial (on the Park East projects)," Walker said.
County Board Chairman Lee Holloway said city officials have not asked the board to get involved with the county's Park East process.
"If the city of Milwaukee is interested in taking over management of these properties, they are more than welcome to make a public presentation to a County Board committee," he said. "So far, that has not happened."
Despite the dismal economy and Milwaukee County's failure to attract development to its land, Marcoux said he is optimistic that the Park East corridor will eventually be developed.
"It's a prime location," he said.

Andrew Weiland is the managing editor of BizTimes Milwaukee.

Stock markets crashing around the world, banks failing, homes repossessed, jobs lost and businesses closing daily. Many people are living in fear, anger, loosing sleep, with depression following quickly behind these events, and seemingly no end in sight.

This is old news! However, it is easy to blame, panic and sit back feeling really helpless and stuck!
From my own perspective (both personal and professional), my clients, friends and family are all experiencing this to some degree or another. We have talked seriously (or joked) about:
1) Never being able to retire.
2) Those of us that are retired becoming Wal-Mart greeters or, worse, having to go back to work.
3) Our 401k's being 101k's and business owners taking the money and leaving the country.
4) Selling our house/car/motorbike etc.
5) Eating out less.
6) Using coupons (some of us haven't done that in years!).
7) Really looking at our credit card and other bills.
8) Canceling trips and projects or any non-essentials.

 

I would suggest that there are several proactive steps that we can take.

Think and talk about "what is the worst that can happen?" and talk about what you can do if it did. Facing the "unknown" and fears makes the darkness lighten and helps to untie the knot in your stomach.

Make a list of all of the things that make you happy. Take a good look at that list! I would be willing to bet that the majority of items on that list are free!

There are a number of people I know who are in the real estate industry. I don't have to tell you what's happening in that market. I also recall the years where they made millions (we've all seen their faces in the newspapers and the high income levels and awards they achieved), and now they are complaining.

A successful real-estate person I know told me recently, "Yes, it's tough, but we are actually having our best year ever!"  When I asked what he attributed that to, he said, "We are having to work a lot harder but the results are good. I also have good health and my family is well, and that's all that really matters."

Wow! What a positive and unusual attitude, especially in today's climate. Really think about that … good health and family - banks and the stock markets don't own a piece of that!

If you are close to retirement, your investments should not be almost wiped out. Unfortunately I'm suddenly talking to too many friends who are going back to the "ratty jobs" that they don't want or putting off their dream of retiring this year. Or they're just starting over. Our financial planner, when we started working with her many years ago, said, "You need to realize that there will be downturns in the markets and bad years. You will need to weather those markets and not panic. Revisit your investments every year and make adjustments as necessary."

How wise she is. We did survive the crash of 2001-02, and we will survive this downturn. It isn't permanent. In the USA, it may settle down after the new President is in office, but I make no promises.

This is certainly a bad year, but I encourage you not to panic. Face your fears, focus on the positives, adjust as necessary, but please don't get "stuck" and make bad decisions that you will regret for a lifetime.

 

Carol Komassa is a certified life coach, a human resources expert and the owner of C.K. Brit, Human Resources Consulting LLC in Mequon.

In today's hyper media-centered world, I continue to tell my friends and family its important to get a balanced viewpoint on many of the issues that we face.

I'm often frustrated by the focus that seems to permeate everything we read, view or listen to...The negative viewpoint and the shock value of information. It's like a contest to see who can make us fear the most.

The other day, as I listened to a BBC commentator ask a so-called expert about foreclosures in the U.S. housing market, the reporter said, "So, we're really heading for another Great Depression right?"

The expert almost laughed and said, "No, we aren't even close to the 50 to 60 percent of the foreclosure rate of the 1930s ... In fact, it's really only doubled from 2 to 4 percent."

My point is everyone is looking for the next shocking headline.

Why not look for the silver lining in every situation? One of the things my brief experience of 56+ years on the planet has taught me is there usually a silver lining to find… You just have to train yourself to look for it. As I like to say, rummage around in the closet and sometimes it will fall out, maybe even hit you in the head, but its worth the effort.

Come to think of it, I've been hit on the head few too many times, some would argue.

Some might call me different, but I can tell you it's really cool to always let your mind search for the positive, the lesson learned, the golden nugget in a situation. Many times, what appears on the surface to have negative consequences is another opportunity just waiting. Someone once told me that FEAR stands for False Evidence Appearing Real. What an interesting thought, eh? 

Here's a short list to get you started.. Can you find a Silver Lining?

Janesville GM plant closing. Gas nearing $5.00 gallon. The War in Iraq. Outsourcing to China. A down stock market. The Miller/Coors merger. Divorce. Losing your job. Inflation … You get the idea.

From my personal perspective of a naturalized U.S. citizen, one of the most remarkable attributes of Americans I really admire is their capacity to solve problems with unparalleled ingenuity, unbridled compassion and most important ... a belief in the freedom of  expression without fear of reprisal. They find silver linings in themselves.

My challenge to you is to find the silver lining in situations in both your personal and business lives. And when you do, focus on it. You may find your days (including Mondays) are almost like holidays.

P.S. Warning: The evening news will never be the same!
 
Gary Billington is vice president of client relations at Plunkett Raysich Architects LLP in Milwaukee.

Solar and wind energy may become primary components of our nation's alternative energy sources in the future. But how do we use this energy efficiently? What happens to the energy that is generated during non-peak usage periods?

For example, wind power generated at non-peak hours such as 3 a.m. can be wasted unless an efficient storage system is used. Conversely, solar energy is obviously not generated at night, yet some level of energy is still required to power homes and businesses. How do we store that energy so that it can be used when the sun isn't generating power?

The answer is energy storage systems which are available right now to commercial and even consumer usage. In fact, state-of the-art energy storage systems are currently on display at the Future House USA exhibit at the Beijing Olympics.

To think that we can effectively use solar and wind energy without some sort of energy storage is inconsistent with the purpose of renewable energy. The question, then, is how to use these alternative energy sources efficiently, allowing energy to be stored for use when it is most needed. That's where energy storage comes in to the picture.

Energy storage systems enable users to use energy when they most need it, while avoiding waste during off-peak hours when it is generated. This maximizes the use of wind and solar power and other alternative energy sources.

But energy storage has applications beyond the use of solar and wind power.

In electric utility applications, energy storage systems can be used to reduce the load on sub-station transformers and even fossil fueled generating stations that are working at maximum capacity during times of peak demand. This enables the utility to defer costly capital upgrades by charging the energy storage device at night and using that stored energy during these peak times and thereby reducing the work load on both the sub-station and generating stations. 

If current discussion is correct on the estimated $1 trillion that will need to be spent to upgrade the transmission and distribution infrastructure in the United States to be able to support the growing demand for energy and to accommodate proposed renewable energy generation, then the need for energy storage is even more urgent and compelling.

Energy storage can also have household implications. The Future House USA project currently on display at the Beijing Olympics is a Zero Net Energy structure, meaning it generates its own energy off-grid. The project uses a zinc bromide energy storage system to store solar energy generated during the day for use when the sun is not available to generate power.

Future House USA incorporates five elements: energy efficiency, indoor air quality, water consumption, storm water management and construction recycling in order to achieve a design to maximize the homes energy efficiency, environmental compatibility and sustainability. This design has achieved a ZNE home, generating and utilizing all of its own energy. Energy storage is a key element in achieving ZNE.

Our nation's energy independence will require renewable, green energy sources. But without the ability to store that energy, much of it will be wasted.

We simply can't afford that waste, particularly when there are viable solutions available today.

 

Rob Parry is the chief executive officer of ZBB Energy Corp. of Menomonee Falls.